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Manhattan Moment: The Final Four of college basketball subsidies

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While college basketball fans will have to wait until the end of this weekend to find out if their team made the Final Four in the NCAA tournament, the final four schools in terms of athletic subsidies have already been decided. Even though all of their teams lost in the second round of the basketball tournament, the University of Massachusetts-Amherst, University of Delaware, Western Michigan University, and New Mexico State University made the final four of subsidies received by their athletic departments. These four public universities each gave more than $19 million just to run sports programs.

When athletic departments cannot cover their expenses, they look for support from elsewhere in the university budget. The NCAA defines subsidies as all revenues not generated by the department's athletic functions. This usually takes the form of student fees and institutional support. For public schools especially, this money also comes from taxpayers.

Our final four teams are not alone — the subsidies tournament was highly competitive. Of the 45 public university athletic departments in the tournament, 41 received subsidies valued at more than $420 million. Of this amount, $136 million came from student fees and $284 million came from non-athletic school funding.

Coastal Carolina University — a team that made a quick exit from the basketball tournament — received 82 percent of its $17.6 million budget from subsidies. The exciting game in which Stephen F. Austin University upset Virginia Commonwealth University pitted two schools against each other that received a combined $28 million in subsidies — 80 percent and 75 percent of their athletic budgets, respectively. Even the University of Virginia, one of the top four seeds in the tournament, received $13 million in subsidies.

When schools subsidize athletics, they divert funds from educational programs to pay for coaching salaries, athletic scholarships and athletic facilities maintenance. Louisville head coach Rick Pitino is undoubtedly successful, but is his $5 million salary the best use of students’ tuition dollars and taxpayers’ money? Cardinals fans will certainly ask that question if Pitino’s team fails to beat arch-rival Kentucky on Friday night. If Pitino’s salary instead went toward student financial aid, 500 students could have received full-tuition scholarships to attend the top-rated university this year. Instead, the activity fees, which subsidize the athletics department, increase the cost of attendance without providing students much — or any — additional educational benefits.

Some students might gladly pay more to support their beloved sports teams, but many others probably wish that instead of building a new basketball arena and athletes-only training facility, their money was going toward better research facilities, increased financial aid, or lower tuition.

Even basketball powerhouses require subsidies. The University of Kansas is a perennial contender in March Madness, boasting the longest active streak of tournament appearances, but its athletic department still needs nearly $3 million in subsides. Even with these funds, Kansas lost to Stanford in the round of 32.

College basketball is undoubtedly popular, but if these programs are costing taxpayers money, increasing the cost of tuition, and diverting funds from academics, are they fair to students and taxpayers? Western Michigan and New Mexico State spend $13,782 and $10,454 on academics per student, but spend an additional $70,000 on each student athlete.

As beloved as college sports are, the massive amounts of subsidies athletic departments receive means that funds cannot go to other, more vital, parts of the university—or stay in students’ or taxpayers’ pockets. Taxpayers who think they are paying for public higher education may be surprised to hear that they are paying for expensive coaches’ salaries or the construction of new basketball arenas. This is where the real March Madness is found, and it is costing students and taxpayers much more money than what they might be betting in bracket pools.

Jared Meyer is a policy analyst at Economics21 at the Manhattan Institute for Policy Research. A version of this piece originally appeared on the Economics21.org website. You can follow Jared on Twitter here.
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